The head of Goldman Sachs, Lloyd Blankfein, will admit to Congress today that his bank failed to raise the alarm about excesses in the mortgage industry and got involved in "overly complex" derivatives deals that fuelled perceptions of Wall Street running out of control.

In written testimony prepared for the senate's permanent subcommittee on investigations, Blankfein will tell lawmakers that the Securities and Exchange Commission's $1bn (£647m) fraud case against his firm marked a low point in his career.

"It was one of the worst days of my professional life, as I know it was for every person at our firm," says Blankfein's testimony, released by Goldman this evening.

While insisting that the bank has committed no crime, Blankfein concedes that the Abacus mortgage-backed securities transaction at the heart of the SEC's case left a bad impression.

"While we strongly disagree with the SEC's complaint, I also recognise how such a transaction may look to many people," he says. "To them, it is confirmation of how out of control they believe Wall Street has become, no matter how sophisticated the parties or what disclosures were made."

He adds: "We have to do a better job of striking the balance between what an informed client believes is important to his or her investing goals and what the public believes is overly complex and risky."

According to the SEC, Goldman deceived clients by failing to tell them that Abacus, a so-called "synthetic CDO", contained mortgages selected by a hedge fund that was betting on the package's default. The Abacus transaction was masterminded by Fabrice Tourre, now a London-based trader, who will also be giving evidence to Congress today. Within nine months, 99% of the mortgages within Abacus had been downgraded, leaving Royal Bank of Scotland, which backstopped the deal, with an $840m liability.

In his remarks, Blankfein accepts that "many Americans are sceptical about the contribution of investment banking to our economy and understandably angry about how Wall Street contributed to the financial crisis".

He said: "What we and other banks, rating agencies and regulators failed to do was sound the alarm that there was too much lending and too much leverage in the system — that credit had become too cheap.

"One consequence of the growth of the housing market was that instruments that pooled mortgages and their risk became overly complex. That complexity and the fact that some instruments couldn't easily be bought or sold compounded the effects of the crisis."

The Goldman chief executive's words are unlikely to mollify critics in Congress. On Monday, 60 lawmakers signed a letter urging the SEC to broaden its investigation to other CDOs issued by Goldman. The bank is also facing a potential class action lawsuit from shareholders claiming it was slow to reveal the SEC's probe.

Adding to its woes, Goldman was the subject of pointed criticism from a former chief executive, Jon Corzine, who said defending its conduct would involve a "very uncomfortable justification". Corzine, who ran Goldman from 1994 to 1998, told ABC News that Abacus was structured with no economic benefit."Hedging positions is a normal function. Unfortunately in this particular case, the transaction didn't appear to have a lot of underlying connection to providing money for the mortgage market," Corzine said.